Average Income in Irvine

What do you think the average *real* income in Irvine is?

  • Less than $100k

    Votes: 8 14.5%
  • $100k

    Votes: 15 27.3%
  • $200k

    Votes: 26 47.3%
  • $300k

    Votes: 2 3.6%
  • More than $300k

    Votes: 4 7.3%

  • Total voters
    55

irvinehomeowner

Well-known member
KPop time!

Back during the bubble, one of the arguments about Irvine housing prices was that the price to income ratio was too high.

People like AZDave, quoting Wikipedia, contended that the average income in Irvine was $100k and that the median pricing was way too high.

I think the average income in Irvine is higher than that. I know single income families pulling in more than $100k and dual income families making significantly more than that. High incomes has to be part of the reason why Irvine prices are still higher than surrounding areas.

This also goes for Tustin Ranch, Newport and some South County cities.

How can you get a valid average when there are residents with cash businesses, foreign income and various variables (like retired people and students) that skew true earnings. That's the problem with "reported" income and census data... it doesn't give you an accurate picture.

So where do you think the *real* average is?
 
As a measure, median income already "smooths" out statistical outliers. Irvine is a large enough city (over 200,000) that the median income measure should be fairly accurate.

Now I don't know the exact number of people with cash businesses who fraudulently under report their income, but if that's what it takes to buy a home in Irvine, then I'm not sure why it's even being discussed.
 
It's not as simple as what the incomes are.  Are we talking about per capita earners from 25 to 55 or are we talking about household income?  It's also important to consider what the funds that buyers have available for downpayments that buyers have.  I'm sure there are a lot of dual income households in Irvine making $150k-$300k per year.  But I've had buyers who made less than $100k in household income (single earners) but had very high savings ($500k to $1m). 
 
And conversely, we've all seen the many households in Irvine and surrounding areas who were completely faking it by pulling money out of their houses.

How many were $75k ea dual income families who were also pulling $75k from the house?

How many were mortgage brokers, realitters, and car salesmen on commissions taking home half or less of their peak earnings?

 
But I guess that's also what skews the "average". Since Irvine has a huge rental market, a large student population and a significant number of retired people, the reported average (or median) isn't what should be compared to prices.

What we should be looking at is the average income of people buying homes in Irvine... but that type of statistic can only be pulled from purchases where buyer income is used to qualify for homes.

Either way, I don't think median or average income is a reliable method to determine affordability. This isn't to say homes are not overpriced in Irvine (they are), but I'm not sure how accurately it reflects that. I'm sure there are areas where the average price/income ratio is much higher than Irvine.

I'm thinking that in the "homebuying" segment of Irvine's population, we're probably looking at over $200k if not higher.
 
irvinehomeowner said:
But I guess that's also what skews the "average". Since Irvine has a huge rental market, a large student population and a significant number of retired people, the reported average (or median) isn't what should be compared to prices.

What we should be looking at is the average income of people buying homes in Irvine... but that type of statistic can only be pulled from purchases where buyer income is used to qualify for homes.

Either way, I don't think median or average income is a reliable method to determine affordability. This isn't to say homes are not overpriced in Irvine (they are), but I'm not sure how accurately it reflects that. I'm sure there are areas where the average price/income ratio is much higher than Irvine.

I'm thinking that in the "homebuying" segment of Irvine's population, we're probably looking at over $200k if not higher.
You'd have to further break that down by the type of buyer.  Obviously younger buyer who's looking for a 2/3 bedroom condo in the $300k-$400k will be much lower than a dual income family looking for a 2,000sf SFR. 
 
The average income in Irvine is not a gauge for setting home prices. The price gauge is validated by knife catchers who ultimately fall for the WTF pricing. They are out of towners who are not familiar with price scale or some 85 Degree Celsius cults.

Who cares about the low income or average income earners. They are at the bottom of the totem pole and IAC will take care of them and keep them as renters for life.

 
Irvine apartments are nice. I remember my apartment in college. I had to work 20 hours a week just to keep the roof of this roach shack over my head. Not even a stove, just a hot plate.

IAC puts in huge swimming pools, gyms, underground parking facilities, they throw TIC parties every once in a while (some I've attended). I think Irvine renters are living large.
 
IndieDev said:
Irvine apartments are nice. I remember my apartment in college. I had to work 20 hours a week just to keep the roof of this roach shack over my head. Not even a stove, just a hot plate.

IAC puts in huge swimming pools, gyms, underground parking facilities, they throw TIC parties every once in a while (some I've attended). I think Irvine renters are living large.
As a current IAC renter, I would agree that the apartments are pretty nice when compared to other apartments (especially when you have a washer/dryer inside your unit and a garage for your car).  But they come at a price, a high rent.  I'm sure I could pay 10-20% less in rent for a comparable apartment complex in one of Irvine's surrounding areas. 
 
My guess is homes in Irvine are overpriced due to the status premium that some are willing to pay.  Don't get hung up on average income or median income for an area.  What you really need to see is the distribution of incomes to know whether a large enough cohort exists at a certain income level to afford to purchase in Irvine.  I will also venture to guess that Irvine homebuilders have performed some of this analysis and know how much they can charge to achieve a certain level of sales.

irvinehomeowner said:
How can you get a valid average when there are residents with cash businesses, foreign income and various variables (like retired people and students) that skew true earnings. That's the problem with "reported" income and census data... it doesn't give you an accurate picture.

So where do you think the *real* average is?

The US Census builds estimates of these things into their models.  Nothing, and I mean nothing, about statistics is exact, but these measures give us reasonably close estimates of the truth.
 
Where I work, we use such measures as relative barometers.  Not something you want to make decisions on, or use as a citation for a very specific argument.  Median income in Irvine vs. median income in surrounding areas can tell you things.  Median local income vs. county/state/national tells you something.    But I don't look beyond that.  I agree with Liar Loan in that I'm sure the homebuilders/developers use such statistics to set pricing based on regression models they run.  But it really means nothing to me. 

There are other dynamics that can affect pricing/ demand in Irvine.  Now, if you started taking some measure of cash flow that a family generates, that would tell you something.    Anyways, why do we have to guess and does it really matter?    We can figure what we think makes sense.  Let's take an $850,000 house in Irvine for example.  Assuming you put 20% down, you end up with a $680K mortgage that's going to cost you somewhere around $3500 per month.  Also assume:
HOA: $200/mo
Property Tx + Mello:  $1150/mo
HOI:  $150/mo
You are basically on the hook for $5K per month.  Let's say in addition to these expenses, you spend another $2,500 on everything else.  So after taxes, you need to have 7500 per month.    Assuming your blended all-in tax rate is 30% because of tax subsidies, you need to make about $128K per year (this also varies depending if you are married or not).    You need to make more based on if you have other expenses - day care, student loans, car loans, saving for the future, etc.  What we do know is different people act differently.  If you have two working spouses, are they both maxing out their 401(k) or are they dismissing all savings to get into the large house now?  You just don't know.  Everyone has their own definition of what is right.  I mean, I also assumed that you buy this home with 20 down which is $170,000.  Some people may get their down payment by taking a 401k loan or by other means. 

I think for someone to be comfortable where they could save money, pay for expenses, and comfortably afford an $850K house (w only 20% down), combined income of $250-300K would be about right.  If you have two working professionals, I don't think that is an absurd amount by any means.  The media has dubbed these couples HENRYs (high earners, not rich yet). 




 
akim997 said:
I think for someone to be comfortable where they could save money, pay for expenses, and comfortably afford an $850K house (w only 20% down), combined income of $250-300K would be about right.  If you have two working professionals, I don't think that is an absurd amount by any means.  The media has dubbed these couples HENRYs (high earners, not rich yet). 

the absurd part is the kind of house 850K gets you in irvine; my wife and i will likely take our talents to lake forest.
 
from my experience, most Irvine families are still strapped to almost the max... not much retirement savings or savings in general...  almost month to month for those who are still holding from buying during the highs... not much vacation, not much extra spending cash for dinners out, for Christmas or gadgets...

the equity comes from previous sales of starter homes, parents and some savings... mostly dual or one & half earners... and the wife almost always want to stay home full time... hubby income is average or above average at best, and most do get on-going parental help...

most families I know are still house poor but lookin' rich at it and some families will still dump EVERYTHING they have into a house just to "make it"...

then there are some who are doing quite well during the recession, some who bust their hump and loosing out on family time to get that promo... there is a reason why no one is hiring because companies have figure out how to get A LOT more out of workers... but I imagine some would burn out in 2012... there are a few guys, I'm really concern about...

BTW... great article on NPR this morning... the GREAT Chinese Real Estate Bubble is Bursting!!!

So... FCB $$ might just run out of $$ in 2012... or we'll see a final push in Q1 then... we might finally see a substantial drop in prices that some of us have been waiting for since 07...!
 
qwerty said:
akim997 said:
I think for someone to be comfortable where they could save money, pay for expenses, and comfortably afford an $850K house (w only 20% down), combined income of $250-300K would be about right.  If you have two working professionals, I don't think that is an absurd amount by any means.  The media has dubbed these couples HENRYs (high earners, not rich yet). 

the absurd part is the kind of house 850K gets you in irvine; my wife and i will likely take our talents to lake forest.

Completely agree.

I look at young couples today and feel a bit of pity. How are these guys going to make it in the new bubble economy when they can barely afford a $500,000 "starter" home. $500,000 during the mid-90s bought you a nice 3 car garage, 2,000+ sqft home in Turtle Rock with a pool. I doubt you can find one that isn't trashed for under $1,000,000 right now in this depressed economy. Something is going to give in 2012, and all the right ingredients are there.
 
IndieDev said:
qwerty said:
akim997 said:
I think for someone to be comfortable where they could save money, pay for expenses, and comfortably afford an $850K house (w only 20% down), combined income of $250-300K would be about right.  If you have two working professionals, I don't think that is an absurd amount by any means.  The media has dubbed these couples HENRYs (high earners, not rich yet). 

the absurd part is the kind of house 850K gets you in irvine; my wife and i will likely take our talents to lake forest.

Completely agree.

I look at young couples today and feel a bit of pity. How are these guys going to make it in the new bubble economy when they can barely afford a $500,000 "starter" home. $500,000 during the mid-90s bought you a nice 3 car garage, 2,000+ sqft home in Turtle Rock with a pool. I doubt you can find one that isn't trashed for under $1,000,000 right now in this depressed economy. Something is going to give in 2012, and all the right ingredients are there.

1995 was 16 years ago... stop living in the past.

it's all relative old man... when i first started driving in 1995 a gallon of gas was what... $1.25? 

i was still in high school and could care less about the price of a house so i don't know for sure, but i'd bet you that in 1995 people where complaining how a house in the 1979 only cost xxx amount of dollars.
 
villagepeople said:
IndieDev said:
qwerty said:
akim997 said:
I think for someone to be comfortable where they could save money, pay for expenses, and comfortably afford an $850K house (w only 20% down), combined income of $250-300K would be about right.  If you have two working professionals, I don't think that is an absurd amount by any means.  The media has dubbed these couples HENRYs (high earners, not rich yet). 

the absurd part is the kind of house 850K gets you in irvine; my wife and i will likely take our talents to lake forest.

Completely agree.

I look at young couples today and feel a bit of pity. How are these guys going to make it in the new bubble economy when they can barely afford a $500,000 "starter" home. $500,000 during the mid-90s bought you a nice 3 car garage, 2,000+ sqft home in Turtle Rock with a pool. I doubt you can find one that isn't trashed for under $1,000,000 right now in this depressed economy. Something is going to give in 2012, and all the right ingredients are there.

1995 was 16 years ago... stop living in the past.

it's all relative old man... when i first started driving in 1995 a gallon of gas was what... $1.25? 

i was still in high school and could care less about the price of a house so i don't know for sure, but i'd bet you that in 1995 people where complaining how a house in the 1979 only cost xxx amount of dollars.

When you were in high school did you ever think you would end up spending $500,000+ for the crapbox you bought from TIC?
 
Back
Top